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                                                                   Exhibit 10(v)

                             IPA SERVICE AGREEMENT


     This IPA Service Agreement is made and entered into as of this 1st day of
January, 1997 by and between PHYSICIANS HEALTH SERVICES OF CONNECTICUT, INC., a
Connecticut corporation, and PHS INSURANCE OF CONNECTICUT, INC., a Connecticut
corporation, (together, "PHS"), on the one hand, and HERITAGE INDIVIDUAL
PRACTICE ASSOCIATION, INC. ("IPA"), on the other hand;

     WHEREAS, PHS arranges for the provision of Covered Services (as defined
below) to Members (as defined below);

     WHEREAS, IPA is an individual practice association which has entered into
contracts with physicians and other health care providers to arrange for and
facilitate the provision and delivery of Covered Services (as defined below) to
Members;

     WHEREAS, PHS and IPA mutually desire to preserve and enhance patient
dignity;

     NOW, THEREFORE, in consideration of the premises and other mutual covenants
herein contained and other good and valuable considerations, it is mutually
agreed as follows:

                            ARTICLE 1.  DEFINITIONS
                            -----------------------

1.1  "Affiliate" means any company controlling, controlled by or under common
     control with PHS.

1.2  "Consultant" means a physician (other than a Participating Physician and a
     Non-IPA Participating Physician) (i) to whom a Member has been referred or
     who has been asked to provide Covered Services on behalf of a Member by a
     Participating Physician or (ii) who provides Covered Services to IPA
     members pursuant to the out of network benefits of a Program.

1.3  "Corridor" means the amount equal to 5% greater or less than budgeted
     amounts established pursuant to Section 5.1 hereof.

1.4  "Covered Services" means those Medically Necessary services and benefits
     that Members are entitled to receive under a Program.  As used herein,
     Covered Services excludes PHS Responsible Services.

1.5  "Emergency" means the accidental injury or the unexpected onset of a
     serious illness, which has the potential for causing immediate disability
     or death or requiring immediate alleviation of pain and discomfort.  The
     determination of whether Emergency services are Covered Services rests
     exclusively with the Medical Director.

1.6  "Excess Payment" means amounts by which payments made by PHS on behalf of
     IPA pursuant to Section 5.3 hereof exceed amounts budgeted therefor in
     accordance with Section 5.1 hereof (after giving effect to any applicable
     Corridor.

1.7  "Fund" means each of the funds established pursuant to Section 5.2

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1.8  "IPA Member" means Members who have selected or who have been assigned a
     Participating Physician as their Primary Care Physician.

1.9  "IPA Advisory Committee" means a committee comprised of representatives of
     IPA, and such other individual practice associations or physician hospital
     organizations with which PHS contracts for the provision of Covered
     Services, which elect to have representation on the IPA Advisory Committee.

1.10 "Medical Director" means one or more physicians or other persons appointed
     by PHS to be responsible for, among other things, administering PHS's
     medical affairs and for serving as medical liaison to Participating
     Physicians.

1.11 "Medically Necessary" means services or supplies which are necessary and
     appropriate for the treatment of a Member's illness or injury or for the
     preventive care of a Member, according to accepted standards of medical
     practice prevailing at the time of treatment.

1.12 "Member" means (i) any person who has entered into a contract with PHS, or
     any Affiliate, for the provision of Covered Services, and his or her
     eligible dependents; (ii) any person and his or her eligible dependents,
     who is offered health care services through a plan sponsored by his or her
     employer that is administered by PHS, or any Affiliate   ; and (iii) any
     person who participates in a Program for a government sponsored plan of
     health insurance.

1.13 "Non-IPA Participating Providers" means a health care provider with whom
     PHS directly or indirectly contracts for the provision of Covered Services
     (other than through IPA).

1.14 "Office Manual" shall mean the PHS/IPA Office Manual describing, among
     other things, HIPA's rules, regulations, protocols and procedures;
     reimbursement schedules; termination protocols and appeals procedures; and
     PHS's billing procedures, referrals and authorization policies, utilization
     review and quality assessment guidelines, coding guidelines and benefit
     summaries, as such Office Manual is revised from time to time.  The Office
     Manual as in effect on the date hereof is incorporated herein by reference.
     As used herein, "Office Manual" means both the PHS and IPA sections of the
     Office Manual.

1.15 "Participating Physician" means a duly licensed medical doctor, osteopathic
     physician or oral surgeon who has entered into a    currently effective
         Physician Agreement with IPA.

1.16 "Performance Standards" means standards used by PHS to measure performance
     of Participating Physicians, including without limitation, quality of care
     and service, compliance with utilization and referral protocols, billing
     procedures, claims adjudication, record keeping requirements and such other
     criteria reasonably believed by PHS to be appropriate, as such Performance
     Standards may be modified from time to time.

1.17 "PHS Responsible Services" means other Covered Services listed in Exhibit A
     for which PHS assumes responsibility for payment, as such Exhibit A may be
     modified from time to time in accordance with Section 10.8 hereof.

1.18 "Physician Agreement" means an agreement between IPA and Participating
     Physicians in the form of Exhibit B hereto, as such Exhibit B may be
     amended or modified from time to time in accordance with Section 10.8
     hereof.

1.19 "Programs" means all programs of health insurance established, administered
     and/or maintained by PHS, or any Affiliate, or established, administered
     and/or maintained jointly by PHS, or any Affiliate, and another payer now
     or at any time during the term of this Agreement, including,

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     without limitation, fully funded plans, administrative services only plans,
     point of service plans, network access plans, Medicare cost plans, small
     group plans, governmental plans (other than Medicare risk and Medicaid),
     gatekeeper model plans and exclusive provider organization plans, as such
     Programs are modified from time to time in PHS's sole discretion. For
     purposes of this Agreement, Programs includes all Programs marketed jointly
     by PHS and The Guardian Life Insurance Company of America.

1.20 "Primary Care Physician" means a Participating Physician who provides
     primary care services to Members, initiates referrals for non-primary care
     services and is responsible for maintaining the continuity of care provided
     to a Member.  A Primary Care Physician may be a family practitioner,
     internist or pediatrician.

1.21 "Referral" means written authorization issued by the Primary Care Physician
     prior to the Member's use of a specialist.

1.22 "Surplus Amounts"  means the amounts by which actual payments made by PHS
     on behalf of IPA pursuant to Section 5.3 hereof are less than amounts
     budgeted therefore in accordance with Section 5.1 hereof (after giving
     effect to any applicable Corridors).

1.23 "Service Area" means the towns in each case listed in Schedule I in the
     State of Connecticut and within such towns, the service areas of the
     hospitals in each case as listed in Schedule I.


                       ARTICLE II - PHS RESPONSIBILITIES
                       ---------------------------------

2.1  Administrative Function.  PHS will perform, as requested by IPA, all
     -----------------------
     administrative, marketing, enrollment, financial, utilization review,
     accounting, claims processing and payment, management information systems,
     member grievance, quality assessment and other functions necessary or
     appropriate for the proper administration of the Programs and the provision
     of Covered Services necessary or appropriate to Members, other than
     clinical services.  Utilization review shall be coordinated with
     appropriate IPA committees, upon IPA's reasonable request.

2.2  Credentialing.  PHS shall be responsible for all credentialing and
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     recredentialing of all Participating Physicians.  Credentialing shall be
     coordinated with appropriate IPA committees.

2.3  Office Manual.  PHS shall maintain the Office Manual for the benefit of
     -------------
     PHS, IPA and Participating Physicians, which shall set forth the programs,
     procedures, rules, regulations and protocols of IPA and PHS, relating to
     the delivery of Covered Services by Participating Physicians and
     participation of Participating Physicians as members of IPA.  PHS shall
     furnish an Office Manual to each Participating Physician and shall send
     supplements or revisions to the Office Manual to Participating Physicians
     prior to the effective date thereof.  PHS shall develop Performance
     Standards which it shall use to monitor performance of Participating
     Physicians.  PHS shall promptly advise IPA (or the IPA Advisory Committee
     if such Committee is assigned responsibility by IPA for performance reviews
     of Participating Physicians) if a Participating Physician fails to satisfy
     such Performance Standards.

2.4  Performance Standards.  PHS shall develop Performance Standards which it
     ---------------------
     shall use to monitor performance of Participating Physicians.  PHS shall
     promptly advise IPA (or the IPA Advisory Committee if such Committee is
     assigned responsibility by IPA for performance reviews of Participating
     Physicians) if a Participating Physician fails to satisfy such Performance
     Standards.

2.5  Data Reporting.  PHS shall provide IPA with quarterly utilization reports.
     --------------
     The utilization review performed by PHS shall be consistent with
     utilization reviews performed for all other health care providers
     participating in PHS's network of providers.

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2.6  Eligibility Verification. PHS shall make available to the Participating
     ------------------------
     Providers electronic eligibility verification of current Members enrolled
     in PHS.  PHS shall use its best efforts to assure that its information is
     current; provided, however, that in the event a Member has ceased to be
     eligible for benefits under a PHS Program at the time services are rendered
     by a Participating Physician, neither IPA nor PHS shall be liable for
     payment in respect of such services.

2.7  IPA Advisory Committee.  PHS shall develop and administer programs to
     ----------------------
     enhance the delivery of Covered Services to Members, including programs to
     achieve more effective quality controls, cost and utilization efficiencies.
     PHS shall consult with the IPA Advisory Committee in the development and
     implementation of programs that would materially affect the manner in which
     Participating Physicians deliver Covered Services to Members and shall use
     its best efforts to incorporate such recommendations of the IPA Advisory
     Committee that would not adversely affect the administration of such
     programs, or PHS's financial condition or business operations.

2.8  Service Area.  Except as provided in Section 3.10, PHS shall not enter into
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     another agreement for physician related Covered Services to be provided
     within the Service Area.  Subject to the foregoing, the composition of
     PHS's network of other health care providers within the Service Area shall
     be solely within the discretion of PHS.

                       ARTICLE III - IPA RESPONSIBILITIES
                       ----------------------------------

3.1  Services.  PHS hereby retains IPA to arrange for the provision of Medically
     --------
     Necessary Covered Services to Members through Participating Physicians and
     where appropriate, Consultants and other health care professionals, in
     accordance with PHS's Programs and applicable law.  Participating
     Physicians shall be responsible for determining Member eligibility and
     benefit verification prior to performing Covered Services, and in the case
     of a Program for which a Referral or other authorization is required prior
     to performing Covered Services, for obtaining such Referral or other
     authorization or, in the event that the Member elects not to obtain such
     Referral or authorization, for informing the Member that failure to obtain
     such Referral or authorization may result in co-payments, deductibles, or
     in certain instances, denial of such services as Covered Services under the
     benefit provisions of the Member's Program.  Failure to inform the Member,
     or the Member's representatives, that certain services are beyond the scope
     or duration of Covered Services, and obtain a written waiver, will result
     in IPA and Participating Physician being unable to bill the Member or PHS.
     All Covered Services rendered by Participating Physicians shall be subject
     to the terms and conditions of this Agreement and the Physician Agreement.

3.2  Standards of Care.  The Physician Agreement shall require Participating
     -----------------
     Providers to render all Covered Services to Members consistent with the
     quality of medical care that is in conformity with accepted medical care
     and surgical practices of the American Medical Association and the practice
     prevailing in IPA's service area.  Each Participating Physician will have
     the training and experience in the field in which they perform Covered
     Services.

3.3  Further Acts.  IPA shall take all acts or actions necessary within the
     ------------
     scope of this Agreement to permit compliance by PHS with applicable law as
     well as accreditation programs conducted by the NCQA, or another entity
     performing similar functions.

3.4  Medical Advice.  IPA and Participating Physicians shall be solely
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     responsible for all medical advice and treatment rendered to Members
     receiving medical care from Participating Providers and for the performance
     of Covered Services.

3.5  Physician Agreements.  IPA agrees that each Participating Physician shall
     --------------------
     enter into a Physician Agreement with IPA and IPA will take such further
     acts as necessary or desirable to amend the

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     Physician Agreement upon reasonable request of PHS. A Participating
     Physician may not participate in Programs through any other entity other
     than IPA or through direct contract with PHS. IPA warrants that all
     Participating Physicians shall have an unrestricted license to practice
     medicine in the State of Connecticut.

3.6  Compliance with PHS Rules.  IPA shall comply with all programs, rules and
     -------------------------
     protocols adopted by PHS in furtherance of Article II    hereof.      IPA
     shall use its best efforts to ensure that Participating Physicians comply
     with all policies and procedures as set forth in the Office Manual and all
     applicable law.

3.7  Notice of Disciplinary Action.  IPA shall notify PHS within five calendar
     -----------------------------
     days should any disciplinary or other action be formally initiated against
     a Participating Physician or any of a Participating Physician's employees
     or others performing Covered Services hereunder under a Participating
     Physician's supervision, which could result in (i) the suspension or loss
     of any license or certification; (ii) the impairment for any other reason
     of such Participating Provider's ability to render the Covered Services
     required under this Agreement; (iii) the imposition of any sanctions
     against such Participating Physician; (iv) any malpractice claim filed
     against a Participating Physician; (v) any compromise, settlement, or
     judgment of such a claim and the terms and conditions thereof; (vi) any
     revocation, suspension, modification, restriction or other change in status
     of a Participating Physician's medical staff privileges at any hospital or
     other health care facility; or (vii) any investigation of a Participating
     Physician by any governmental agency or board or any medical association
     relating to a disciplinary cause or reason.

3.8  Disclosure of Information and Records.  Subject to applicable laws
     -------------------------------------
     regarding confidentiality, IPA hereby authorizes PHS to release to any
     party any and all information, records, summaries of records and
     statistical reports specific to the IPA and/or any Participating
     Physicians, including but not limited to, utilization profiles, encounter
     data, treatment plans, outcome data and other information pertinent to a
     Participating Physician's performance of Covered Services, professional
     qualifications and credentialing information, without receiving prior
     written consent.

3.9  Authority to Act.  IPA represents that it is authorized to act as the agent
     ----------------
     for each Participating Physician for purposes of entering into this
     Agreement.

3.10 Adequacy of Services.  IPA shall provide for the availability of Covered
     --------------------
     Services within the service area at such times and in such locations as
     shall be required to satisfy the needs of IPA Members and as shall be
     necessary to enable IPA to discharge its obligations hereunder.  IPA shall
     at the times maintain a sufficient number of Participating Physicians to
     provide Covered Services hereunder.  If PHS believes at any time that the
     number of Participating Physicians, taken as a whole or within any
     specialty, is insufficient it shall consult with IPA and PHS and IPA shall
     jointly develop a plan to correct such insufficiency as expeditiously as
     possible.

3.11 Hold Harmless.  IPA agrees that it shall look solely to PHS for payment for
     -------------
     Covered Services provided to Members by Participating Physicians under the
     Plans.  IPA further agrees that in no event, including but not limited to
     non-payment  by PHS or IPA, PHS or IPA insolvency, or breach of this
     Agreement shall IPA or Participating Physicians or Consultants (as defined
     in Section 1.3(i)) charge, collect a deposit from, seek compensation,
     remuneration or reimbursement from or have any recourse against a Member,
     other than PHS acting on a Member's behalf, for Covered Services rendered
     pursuant to this Agreement.  This provision shall not prohibit collection
     by Participating Physicians of copayments or supplemental charges made in
     accordance with Programs.  This Section 3.11 shall survive termination of
     this Agreement regardless of the cause giving rise to termination and shall
     be construed to be for the benefit of Members.

3.12 Delegation.  IPA and PHS agree that IPA may delegate to PHS the performance
     ----------
     such of its responsibilities as it may determine from time to time.

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3.13 Non-Discrimination.  Except as otherwise provided herein, Participating
     ------------------
     Physicians shall provide Covered Services to all Members in a manner
     similar to the manner in which Participating Physicians provide services to
     other patients and shall not discriminate in the acceptance of Members as
     patients or treatment of Members on the basis of race, color, national
     origin, ancestry, religion, sex, marital status, sexual orientation or age.

                             ARTICLE IV - PROGRAMS
                             ---------------------

4.1  Program Design and Introduction.  PHS shall have sole authority over
     -------------------------------
     matters relating to Program design, introduction of new Programs and
     modification or elimination of existing Programs, including without
     limitation, utilization, referral, quality assessment, reimbursement and
     reimbursement protocols relating to such Programs.  PHS shall consult with
     the IPA Advisory Committee in the material design features of Programs and
     shall use its best efforts to incorporate the reasonable recommendations of
     the IPA Advisory Committee into final Program design that do not adversely
     affect the administration, financial or operational aspects of such
     Program.

4.2  Participation in Programs.  Except as waived by PHS, which waiver PHS shall
     -------------------------
     not unreasonably withhold or delay, Participating Physicians are required
     to participate  in all Programs and PHS may not exclude any Participating
     Physician except as set forth below.  IPA agrees to immediately terminate
     any Participating Physician who notifies IPA or PHS that he or she will not
     participate in a Program or who does not accept Members enrolled in one or
     more Programs.  Notwithstanding the foregoing, PHS may select a subset of
     Participating Providers, upon consent of IPA, which consent shall not be
     unreasonably withheld, if PHS is requested to reduce the size of its panel
     of Participating Physicians for an employer group of 1,000 or more eligible
     Members.

                            ARTICLE V - COMPENSATION
                            ------------------------

5.1  Health Care Service Budgets.  This budget for Covered Services for IPA
     ---------------------------
     Members shall be established by mutual consent and shall be deemed to be
     incorporated herein by reference.

5.2  Capitation System.
     -----------------

     PHS shall allocate to IPA a monthly capitation in accordance with Exhibit C
     from which IPA shall compensate Participating Physicians, Consultants, Non-
     IPA Participating Providers and also, in cases of Medical Emergency or upon
     prior approval by PHS, other health care providers, for Covered Services
     rendered to IPA Members, except (i) Covered Services pursuant to self-
     funded Programs which are paid directly by the employer; (ii) Covered
     Services pursuant to Programs for which PHS pays Participating Physicians
     directly; (iii) as specifically provided    and agreed to by     IPA
         in connection with certain Programs.  PHS shall allocate amounts from
     the capitation payment hereunder to each of the following three funds in
     accordance with Exhibit C:  an in-patient hospital fund; and out-patient
     hospital fund and a physician and other capitated services fund.

     The risk sharing arrangements between PHS and IPA are as set forth below:

     (i)  The In-Patient Fund.  In the event that payments in respect of
          -------------------
          hospital in-patient Covered Services rendered to IPA Members exceed
          amounts budgeted therefor in accordance with Section 5.1 hereof, fifty
          percent (50%) of the deficit over the Corridor shall be deemed to be
          Excess Payments hereunder.  In the event that payments in respect of
          hospital in-patient Covered Services rendered to IPA Members are less
          than amounts budgeted therefor in accordance with Section 5.1 hereof,
          fifty percent (50%) of the surplus under the Corridor shall be deemed
          to be Surplus Amounts hereunder.

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     (ii)   The Out-Patient Hospital Fund.  In the event that payments in
            -----------------------------
            respect of hospital out-patient Covered Services rendered to IPA
            Members exceed amounts budgeted therefor in accordance with Section
            5.1 hereof, fifty percent (50%) of the deficit shall be deemed to be
            Excess Payments hereunder. In the event that payments in respect of
            hospital out-patient Covered Services rendered to IPA Members are
            less than amounts budgeted therefor in accordance with Section 5.1
            hereof, fifty percent (50%) of the surplus shall be deemed to be
            Surplus Amounts hereunder.

     (iii)  The Physician and other Fund.  In the event that payments in respect
            ----------------------------
            of Covered Services rendered to IPA Members other than the Covered
            Services described in clauses (i), (ii) and (iv) of this Section
            5.2, exceed amounts budgeted therefor in accordance with Section 5.1
            hereof, one hundred percent (100%) of the deficit shall be deemed to
            be Excess Payments hereunder. In the event that payments in respect
            of Covered Services (except as provided in clauses (i), (ii) and
            (iv) rendered to IPA Members are less than amounts budgeted therefor
            in accordance with Section 5.1 hereof, one hundred percent (100%) of
            the surplus shall be deemed Surplus Amounts hereunder.

     (iv)   The Pharmaceutical Fund.  In the event that payments in respect of
            -----------------------
            pharmaceutical related Covered Services rendered to IPA Members
            exceed amounts budgeted therefor in accordance with Section 5.1
            hereof, fifty percent (50%) of the deficit shall be deemed to be
            Excess Payments hereunder. In the event that payments in respect of
            pharmaceutical related Covered Services rendered to IPA Members are
            less than amounts budgeted therefor in accordance with Section 5.1
            hereof, fifty percent (50%) of the surplus shall be deemed to be
            Surplus Amounts hereunder.

5.3. Payments Administered by PHS.  The amount allocated as the monthly
     ----------------------------
     capitation for Covered Services pursuant to Section 5.2 shall be held and
     administered by PHS for the purpose of enabling IPA to discharge its
     payment obligations as set forth in Section 5.2.  PHS shall act as IPA's
     agent for purposes of making all payments and distributions to
     Participating Physicians, Consultants, Non-IPA Participating Physicians and
     other health care providers as set forth in Section 5.2 (in cases of
     Covered Services rendered to IPA Members).  IPA agrees that the payments
     made by PHS as IPA's agent hereunder shall be deducted from amounts
     allocated to IPA as capitation payments.  Payments shall be made
     irrespective of whether actual payments made pursuant to this paragraph
     exceed the amounts allocated to IPA as capitation payments.  Subject to
     Section 5.5, payments shall be made in accordance with the following:

     (a) Compensation for Participating Physicians, Consultants and Non-IPA
         Participating Providers shall be calculated on the basis of the lesser
         of the Physician's, Consultant's or Non-IPA Participating Provider's
         billed charges, and (i) in the case of Participating
         Physicians,respect the reimbursement schedules agreed to by PHS and IPA
         from time to time or an actuarially determined capitation amount, and
         (ii) in the case of Consultants, Non-IPA Participating Physicians, and
         other health care providers, the PHS reimbursement schedule in effect
         from time to time.  The administrative guidelines for reimbursement of
         fees shall be maintained by PHS.

     (b) Participating Physicians shall be paid within two (2) months of the
         receipt by PHS of a properly submitted bill for Covered Services,
         except for claim payments subject to claims recovery through
         coordination of benefits (C.O.B.).  Participating Physicians shall only
         be paid for bills for Covered Services received by PHS within 90 days
         of the date of service, unless such bills have been subject to claims
         recovery through C.O.B., basic reparation of benefits under an
         automobile no-fault policy, worker's compensation or subrogation
         activity.  For Covered Services involving C.O.B., IPA shall be liable
         to pay Participating Physicians only for bills received within 18
         months of the date of service.  Participating

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         Physicians may not bill Members for bills for Covered Services which
         are not submitted in accordance with this Section 5.3 (b).

5.4. Withhold and Reserve Provision.  PHS may establish a withhold provision for
     ------------------------------
     a percentage of the compensation payable to IPA pursuant to Section 5.2 on
     behalf of Participating Physicians for Covered Services, to be held in a
     risk fund, it being understood and agreed that the amounts retained shall
     be applied to offset the amounts by which the actual costs of Covered
     Services rendered to IPA Members exceed budgeted amounts for such year.
     Actual withhold amounts may vary according to Program and Participating
     Physician.  The percent level of withhold for specific programs and the
     methodology for a variable withhold program shall be subject to IPA
     consent, which consent shall not be unreasonably withheld.  PHS and IPA
     shall, at regular intervals, review the utilization and costs of such
     services.  PHS has the right to increase the percentage of compensation
     withheld to such levels PHS may deem necessary to preserve IPA's fiscal
     integrity; provided, however that any increase is subject to IPA's consent,
     which consent shall not be unreasonably withheld.  Amounts earned on funds
     held in the withhold account shall be the property of PHS and neither IPA
     nor Participating Physicians shall assert any claims to such amounts.

5.5  Excess Payments and Surplus Amounts.  If PHS makes Excess Payments, IPA
     -----------------------------------
     shall be liable to PHS for such Excess Payments and shall repay such
     amounts promptly upon demand by PHS. If there are Surplus Amounts, PHS
     shall allocate such Surplus Amounts to Participating Physicians in
     accordance with instructions from IPA and shall pay such Surplus Amounts to
     Participating Physicians not more than 75 days following the end of the
     year; provided, however, that prior to making any payments from Surplus
     Amounts, Surplus Amounts shall be applied first to reduce or eliminate
     Excess Payments, if any, and shall be payable as provided in this Section
     5.5 only if there are no Excess Payments outstanding in any Fund.

5.6  Intra-Network Payments.  PHS shall make payments as IPA's agent from
     ----------------------
     capitation amounts allocated to IPA for Covered Services rendered to IPA
     Members by Non-IPA Participating Physicians, Consultants or health care
     providers.   PHS will pay Participating Physicians for Covered Services
     rendered to Members who are not IPA Members in accordance with Section 5.3;
     such payments on behalf of Members who are not IPA Members shall not be
     charged against the capitation amount allocated to IPA.  All payments made
     hereunder will be subject to the withhold provisions set forth in Section
     5.4.

5.7  Self Funded Payers; Direct Payments.  For Programs with respect to which an
     -----------------------------------
     employer group self-funds its claims expense or Programs in which PHS
     elects to pay Participating Physicians on a fee for service basis without
     regard to capitation, PHS shall compensate Participating Physicians in
     accordance with the PHS fee schedule then in effect.

5.8  Forms; Cooperation.
     ------------------

     (a)  IPA shall arrange for Participating Physicians to bill PHS for Covered
          Services provided to Members on forms as reasonably specified by PHS.
          These forms shall specify the Covered Services provided and shall
          include all of the statistical and descriptive medical, diagnostic and
          patient data together with identifying information required by PHS.

     (b)  IPA shall arrange for Participating Physicians to cooperate with and
          participate in PHS programs for coordination of benefits with other
          health care plans or any other permitted methods of third party
          recovery.  Such programs include, but are not limited to, the
          following:

          (i)    Assisting Members with required forms.

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          (ii)   Where duplicate coverage exists and the Program appears to be
                 secondary coverage, notifying PHS and for ninety (90) days
                 seeking payment from the other health care plan, before seeking
                 payment from PHS or self funded payer.

          (iii)  Where other plan(s) must pay their benefits before the benefits
                 of the applicable Program, accepting as PHS's payment, the
                 lesser of the payment determined in accordance with Section 5.3
                 (a) and the amount equal to the provider's usual charges for
                 Covered Services, reduced by amounts paid by other plan(s) (or
                 to be paid in the case of Medicare, Worker's Compensation Law,
                 occupational disease or any similar law).

5.9  Coverage Questions.  PHS shall make timely payment to Participating
     ------------------
     Physicians as provided in Section 5.3 unless, prior to the expiration of
     the period set forth therein, PHS notifies the Participating Physician in
     writing that additional information is required or that a coverage question
     (including without limitation, a question relating to coordination of
     benefits or pre-existing conditions) exists.  Such notice shall specify any
     additional information required and shall describe the nature of the
     coverage question.  PHS shall endeavor in good faith to promptly resolve
     coverage questions, and shall make payment, if appropriate, promptly after
     coverage questions are resolved but in no case later than 90 days after a
     submission of all required information.  In the case of requests for
     additional information, the claims shall be paid within 30 days of receipt
     of all requested information.

5.10 Subrogation.  In the event a Member is injured by an act or omission of a
     -----------
     Participating Physician in connection with the rendering of Covered
     Services hereunder, PHS may elect to pursue its subrogation rights, if any,
     against the potentially responsible Participating Physician. PHS shall make
     payment to the Physician in accordance with this Agreement while pursuing
     those rights.

                             ARTICLE VI  - RECORDS
                             ---------------------

6.1. PHS Members.  PHS shall maintain such records and establish and adhere to
     -----------
     such procedures as shall be reasonably required to ascertain the number and
     identity of Members, which information shall be provided to IPA upon its
     request.  IPA shall cooperate with PHS in connection with such records and
     procedures to the end of enabling the parties to accomplish with maximum
     efficiency and minimum administrative cost, determinations of eligibility
     for coverage and the amount of compensation payable to IPA.

6.2. Accounting.  PHS shall maintain, in accordance with generally accepted
     ----------
     accounting practices, such financial and accounting records as shall be
     necessary, appropriate or convenient for the proper administration of this
     Agreement.

6.3. Statistical Records.  PHS and IPA shall jointly maintain such statistical
     -------------------
     records with respect to Covered Services, including the utilization
     thereof, as shall be necessary, appropriate, or convenient for the proper
     administration of this Agreement.

6.4. Compliance With Law.  IPA and PHS agree to maintain their records in
     accordance with applicable federal and state laws and regulations and
     further agree to participate as necessary in required regulatory
     examinations.

6.5. Medical Records.  IPA shall arrange for Participating Physicians to
     ---------------
     maintain adequate medical records for Members in accordance with applicable
     law.  IPA and PHS shall make reasonably available the medical records,
     subject to all applicable state and federal privacy and confidentiality
     requirements, to each other upon request without cost in order to determine
     that the content of such report and the quality of care rendered are
     acceptable, as well as for peer review, grievance review, recredentialing
     or any other reasonably necessary purposes.

                                       9
<PAGE>

6.6. Confidentiality.  PHS and IPA shall ensure confidentiality of Members'
     ---------------
     health and medical records.  IPA and PHS each agree that all records,
     reports, data, data formats, financial information and other documents or
     information pertaining to the other or any related company which are
     provided, made available, or otherwise disclosed to the other pursuant to
     this Agreement or the relationship between PHS and IPA, are confidential,
     and may not be disclosed to any person or entity for any reason at any time
     during or subsequent to the term of this Agreement, except for their
     attorneys, accountants, or other representatives and except as required by
     law.  Anything to the contrary contained in the foregoing notwithstanding,
     any information which has entered the public domain, except solely by a
     party's violation of this provision, shall not be deemed to be confidential
     hereunder.

              ARTICLE VII - LEGAL RELATIONSHIP BETWEEN PHS AND IPA
              ----------------------------------------------------

Independent Contractors.  The relationship of the parties is that of independent
-----------------------
contractors.  None of the provisions of this Agreement are intended to create
nor shall be construed to create a partnership, or joint venture relationship
between the parties. Except as to payment procedures for which PHS shall act as
IPA's agent hereunder, neither party hereto nor any of their respective
officers, members, employees or physicians shall be deemed to be the agent,
employee, or representative of the other party.

                  ARTICLE VIII - INDEMNIFICATION AND INSURANCE
                  --------------------------------------------

8.1. Physician Insurance.  IPA shall require all of its Participating Physicians
     -------------------
     and all Consultants to whom a Member is referred by a Participating
     Physician to maintain professional liability insurance acceptable to PHS in
     an amount not less than $1,000,000 per incident and $3,000,000 aggregate to
     cover all demands, claims and expenses of all kinds that may result or
     arise out of any alleged malpractice or neglect caused or alleged to have
     been caused by such individuals or any of their agents, employees, or
     representatives in the performance or omissions of any act relating to this
     Agreement.

8.2. Cooperative Defense.  The parties recognize that, during the term of this
     -------------------
     Agreement and for some period thereafter, certain risk management issues,
     legal issues, claims or actions may arise that involve or could potentially
     involve the parties and their respective employees and agents.  The parties
     further recognize the importance of cooperating with each other in good
     faith when such issues, claims or actions arise to the extent that such
     cooperation does not violate any applicable laws, cause breach of any
     duties created by any policies of insurance, or otherwise compromise the
     confidentiality of communications of information regarding the issues,
     claims or actions.  The parties shall cooperate in good faith, using their
     best efforts, to address such risk management and claims handling issues in
     a manner that strongly encourages full cooperation between the parties.
     Nothing in this Section 8.2 shall affect any cross or counter-claims that
     may be available to the parties hereto.

8.3  Liability.  Each party shall be responsible for its own actions and
     ---------
     omissions as they may relate to or arise from its duties and obligations
     under this Agreement.

                      ARTICLE IX- TERM OF AGREEMENT
                      -----------------------------

9.1  Term.  The term of this Agreement shall commence on January 1, 1997 and
     ----
     terminate on December 31, 1997.  This Agreement may be terminated by either
     party prior to the expiration of its term in the event of the insolvency of
     the other party, appointment of a trustee or receiver for any substantial
     part of the assets of the other party, or assignment by the other party for
     the benefit of its creditors or the commencement of any proceedings under
     the bankruptcy or insolvency law by or against such other party.  This
     Agreement may also be terminated upon 60 days prior written notice, by
     either party upon the other party's material breach of any of the terms of
     this Agreement and failure to cure such breach within such 60 day period.

                                       10
<PAGE>

9.2  Termination of Participating Physicians.  A Participating Physician
     ---------------------------------------
     terminating his relationship with IPA will also terminate his participation
     in the Programs.  A termination by a Participating Physician shall not be
     deemed a termination of this Agreement, which may only be terminated
     pursuant to Section 9.1.  PHS may terminate a Participating Physician in
     all PHS Programs subject to the due process protocols set forth in the
     Office Manual.  Termination of a Participating Physician's participation in
     Programs shall not be deemed a termination of the Physician Agreement
     without further action on the part of IPA.

9.3  Effect of Termination.
     ---------------------

     (a) Upon the effective termination of this Agreement, all rights and
         obligations of the parties under this Agreement shall immediately
         cease; provided, however, that IPA shall remain responsible for
         providing Covered Services under the terms of this Agreement to Members
         who are under the care of Participating Physicians at the time of such
         termination through the period for which premiums have been paid (but
         in no event more than 90 days, except that if a Member is hospitalized
         at the time of termination, until the Member is discharged), unless PHS
         makes reasonable and medically appropriate provision for the assumption
         of such services by another provider.  PHS shall compensate
         Participating Physicians for those Covered Services, for which premium
         was received, rendered prior to and following the termination date (as
         provided in this Section 9.3(a)) pursuant to the PHS/IPA fee schedule
         in effect at such time.  In the event this Agreement is terminated due
         to the last sentence of Section 9.1, the non-defaulting party shall be
         entitled to pursue all legally available remedies consistent with
         Section 10.4 herein, and damages arising out of such breach.

     (b) Upon termination, PHS is authorized to notify Members, prospective
         Members and Participating Physicians, and other persons and entities
         whom it deems to have an interest herein of such termination.

                           ARTICLE X - MISCELLANEOUS
                           -------------------------

10.1. Successors.  This Agreement shall be binding upon and inure to the benefit
      ----------
      of the parties hereto, their respective heirs, successors and assigns, but
      may not be assigned by either party without the prior written consent of
      the other party, provided, however that a succession to all or
      substantially all of the assets or equity interests of any party shall not
      be deemed to be an assignment in violation hereof.

10.2. Delegation.  IPA shall not, in a manner inconsistent with this Agreement,
      ----------
      subcontract or otherwise delegate its duties under this Agreement unless
      the other party so approves by written consent. All contracts by IPA with
      subcontractors shall be approved in writing by PHS prior to execution
      thereof and copies shall be available to PHS upon its request.

10.3. Headings.  The headings of the various Sections of the Agreement
      --------
      are inserted merely for the purpose of convenience and do not, expressly
      or by implication, limit or define or extend the specific terms of the
      Sections so designated.

10.4. Arbitration.  In the event any dispute shall arise with regard to
      -----------
      the performance or interpretations of any of the terms of this Agreement,
      all matters in controversy shall be submitted to a Board of Arbitrators in
      accordance with the commercial arbitration rules and regulations of the
      American Arbitration Association, and a judgment upon the award entered in
      any court having jurisdiction thereof. Arbitration shall be initiated by
      written notice by the party requesting arbitration to the other party.
      Both parties expressly covenant and agree to be bound by the decision of
      the arbitrators and accept any decision by a majority of the arbitrators
      as a final determination of the matter in dispute.

10.5. Governing Law.  The validity, enforceability and interpretation of
      -------------
      any of the clauses of this Agreement shall be determined and governed by
      the laws of the State of Connecticut.

                                       11
<PAGE>

10.6. Medical Ethics.  IPA and PHS agree that the administration of PHS's
      --------------
      program and this Agreement shall at all times be compatible with sound
      principles of medical ethics.

10.7. Entire Agreement.  This Agreement contains all the terms and
      ----------------
      conditions agreed upon by the parties hereto, supersedes all other
      agreements, oral and otherwise, regarding the subject matter of the
      parties hereto.

10.8. Amendment.  This Agreement may be amended at any time by mutual
      ---------
      agreement of the parties, provided that before any amendment shall be
      operative and valid, it shall be in writing and signed by PHS and IPA. The
      parties agree that, in the event of changes in federal or state law that
      necessitate an amendment to this Agreement, they shall endeavor in good
      faith to reach agreement on such amendment that is consistent with and in
      furtherance of the scope and intent of this Agreement.

10.9  Notices.  All notices expressly required to be given pursuant to
      -------
      the terms of this Agreement shall be in writing and shall be deemed
      effectively given (i) on the date of receipt if personally delivered or
      telecopied to the party to whom the same is directed; or (ii) on the third
      day after mailing if mailed to such party, postage prepaid, addressed to
      the following addresses, or to such other addresses as the parties may
      hereafter designate by like notice:

      to PHS at:

      Physicians Health Services of Connecticut, Inc.
      120 Hawley Lane
      Trumbull, CT  06611
      ATTN:  Executive Director

      and to IPA at:

      c/o Physicians Health Services
      120 Hawley Lane
      Trumbull, CT  06611

      PHS's obligation to notify IPA hereunder for all matters other than
      termination of this Agreement may be fulfilled by PHS's mailing to IPA in
      the manner set forth above in a letter describing the matters subject to
      such notification.  Notice of termination shall be by certified mail.

10.10 Third Party Beneficiaries.  Nothing in this Agreement, express or
      -------------------------
      implied, is intended or shall be construed to confer upon any person, firm
      or corporation other than the parties hereto and their respective
      successors or assigns, any remedy or claim under or by reason of this
      Agreement and any term, covenant or condition hereof, as third party
      beneficiaries or otherwise, and all of the terms, covenants and conditions
      hereof shall be for the sole and exclusive benefit of the parties hereto
      and their successors and assigns.

10.11 Policy Changes.  To the extent additional national accreditation bodies
      --------------
      develop their own accreditation requirements, and these requirements have
      a material impact on the ability of PHS to pursue new business or retain
      current business, PHS and the IPA agree to work together in developing
      additional policy changes.

10.12 Unenforceability.  If any provision of this Agreement is determined to be
      ----------------
      unenforceable, the rest of the Agreement shall remain in full force and
      effect.

                                       12
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
month and year above set forth.

                    PHYSICIANS HEALTH SERVICES OF
                    CONNECTICUT, INC.


                    By: ___________________




                    HERITAGE INDIVIDUAL PRACTICE ASSOCIATION


                    By: ___________________

                                       13
<PAGE>

                                   SCHEDULE 1
                                   ----------



IPA
---
Barkhamsted
Bethel
Bethlehem
Bridgewater
Brookfield
Canaan
Colebrook
Cornwall
Danbury
Goshen
Hartland
Harwinton
Kent
Litchfield
Monroe
Morris
New Fairfield
New Hartford
New Milford
Newtown
Norfolk
North Canaan
Redding
Roxbury
Salisbury
Sharon
Sherman
Southbury
Thomaston
Torrington
Warren
Washington
Winchester
Woodbury

                                       14
<PAGE>

                                   EXHIBIT A
                                   ---------

                            PHS RESPONSIBLE SERVICES
                            ------------------------


The following are PHS Responsible Services:

     General Laboratory procedures and Cytology for which PHS has contracted
with a third-party to provide, including all laboratory procedures as defined by
the CPT code range 80002-89399 but excluding procedures defined by the CPT code
ranges 88104-88199 and 88000-88099 and 88300-88399.

     Dental services
     Hospital stop- loss insurance for inpatient services
     Radiology (other than radiotherapy)
     Audiology
     Rehabilitative services
     Immunizations and Injectables
     Drug and alcohol component of behavioral health services
     Durable medical equipment
     Oxygen and prosthetics
     Ambulance
     Podiatry services
     Chiropractic services
     Optometry services



respect

                                       15